Buy Hindware Home Innovation Ltd for the Target Rs.310 by Choice Institutional Equities
Mixed Quarter Performance; Bathware Resilient, Pipes Weak
HINDWARE reported a muted Q4FY26 performance, impacted by weakness in Consumer Appliances and temporary disruption in the Pipes segment amid sharp PVC price volatility. However, margin improved YoY, supported by portfolio rationalisation, calibrated price hike and operating efficiency. The management remains optimistic on FY27 outlook, supported by premiumisation, improved product mix, capacity ramp-up and strong demand momentum seen in April–May. Further, consolidated margin is expected to improve 100–200 bps in the next two years.
Valuation: We reiterate our ‘BUY’ rating on HINDWARE with a revised target price of INR 310/share (INR 380/share earlier), reflecting a moderation in margin assumptions. We have also revised our estimates to: 1) FY26–FY29E Revenue/EBITDA CAGR of 15%/30% for Bathware segment, respectively, 2) FY26–FY29E Volume/Revenue/EBITDA CAGR of 12%/12%/28% for Piping segment, respectively, driven by expected improvement in Real Estate and Infra activity and 3) FY27E/FY28E/FY29E EBITDA margin for Consumer Appliance business of 5.0%/10.0%/10.0%, respectively, owing to focus on profitable product categories. As a result, we arrive at FY26–FY29E consolidated Revenue/EBITDA CAGR of 13%/33%, respectively. Risks: Possible slowdown in real estate and home improvement activities and higher raw material cost are risks to our ‘BUY’ rating
Q4FY26 Result Review: Mixed Performance with Margin Resilience
* Consolidated revenues came in at INR 6,627 Mn, down 5.2% YoY & up 3.5% QoQ (vs CIE est of INR 7,430 Mn)
* Consolidated EBITDA grew 8.2% YoY to INR 442 Mn (down 8.2% QoQ) (vs CIE est of INR 664 Mn) and EBITDA margin improved 83 bps YoY (down 85 bps QoQ) to 6.7% vs CIE est of 8.9%
* Reported PAT in Q4FY26 came in at INR 82 Mn as compared to the loss of INR 285 Mn in Q4FY25. PAT improved by 70.7% on a QoQ basis ? After JV-loss adjustment, the company reported a loss of INR 189 Mn, although it’s an improvement as compared to INR-339 Mn loss in Q4FY25
Segmental Results:
* Revenue from Bathware segment came in at INR 3,970 Mn, up 10.3/2.8% YoY/QoQ. EBITDA margin improved 96 bps YoY to 9.6%, but down 27 bps on QoQ
* Pipes segment reported degrowth of 28.5% YoY in volume to 11.3 KMT, while it is up by 9.7% on QoQ. At the same time, realisation up 5.3% YoY to 164/kg (down 2.0% QoQ). As a result, revenue came in at INR 1,860 Mn, down 24.7% YoY (up 7.5% QoQ). EBITDA margin was down 394/156 bps YoY/QoQ to 5.4%
* Revenue from Consumer Appliances segment came in at INR 815 Mn, down 13.0/1.2% YoY/QoQ. HINDWARE reported negative EBITDA margin of 8.8% as compared to negative 15.2%/4.9% in Q4FY25/Q3FY26
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SEBI Registration no.: INZ 000160131
